There are several elements that contribute to the success of any business and one of them is making the right decisions. There are so many decisions that must be made in running a successful organization. In order to make the right decision, there are a number of tools that entrepreneurs can use. However, the process of decision making may involve a number of steps.
Main Steps of Effective Decision-making:
- Establish the specific decision: You cannot afford to generalize the process of decision making. In order to find the right tool that will help you make the right decision, you need clear on the decision that must be taken.
- Gather the details: One of the most critical stages in making decisions is gathering the relevant information. This can be through questionnaires, self-assessments and external sources and so on.
- Consider Alternatives: While looking at the various tools to help you take a decision, you should have a provision for the alternatives that would help the company achieve the same objective.
- Weigh all factors: Take time to weigh all the critical factors, especially the information that you have gathered. This will help you determine if you are taking the right direction. Ultimately, the decision that you will take should be in line with the objectives of the company and help solve some of the challenges that the company is facing.
- Pick the best option: Once you have all factors in place and the various alternatives, you should pick the best option. This is what makes entrepreneurs stand out, due to their ability to make critical decisions.
- Implement it: Do not stop at the point where the decision is made; take action to implement it and watch out for the changes.
- Evaluation: Most of the successful entrepreneurs will rescind any decision that is not effective. You should review all the decisions after a while so as to check if the desired results are being achieved. It would be illogical to uphold a decision that is not bringing the desired gains to your organization.
With these few steps, you will be able to make practical decisions and help your organization grow in leaps and bounds. There are a number of tools that you can use to be able to take the right decisions.
Tools for Decision Making:
There are so many techniques that entrepreneurs can use to take up a decision. However, it is important to note that while a particular tool may work in one organization, it may fail in another. A whole range of factors need to be put into consideration before using a specific tool. There are instances where you will find that combining several techniques would be the ideal situation. Here are some of the best tools for decision making:
1) Market Research
Marketing Reasearch is an essential tool, especially when you are gathering the information before taking a decision. This will include analysis of the potential customers, state of the market and the competition in the market among others. This is a strategic tool, which most entrepreneurs rely on to make the right decision.
2) Decision Matrix
With this tool, you will critically analyze all the available options or alternatives of a particular decision. This allows you to look at all the options and the factors that affect each. You can use comparative analysis so that you can find the best option to help you in decision making. This is one of the most critical tools for most organizations as it will help reveal the best strategy and decision to take. Here is below an example of a decision matrix:
3) Cost-Benefit Analysis
With a cost-benefit analysis, you will take the time to assess all the costs that will be involved in the decision taken and the benefits that the organization will gain from this. As a result, entrepreneurs will go for the decisions that will have a greater benefit, in terms of the overall net profits in the organization. The sole objective of any company is to make profits, and as such, every decision taken should be towards that direction.
This is also among the best tools that can be used for comparative analysis. The T-Chart is used to weigh the pros and cons of any option that the organization may be considering. At the end of it all, it helps entrepreneurs to make the right decision, having weighted in all the advantages and disadvantages of all the available options.
5) SWOT Analysis
The SWOT analysis is commonly used for strategic planning and eventual decision making. Using SWOT analysis, entrepreneurs are able to maximize on the strengths of the organization. The weaknesses are also considered in view of the available opportunities. The organization will also consider the possible threats before taking any course of action. This is an effective tool as it allows entrepreneurs to analyze the company from all possible angles before taking a decision.
6) Pareto Analysis
This is commonly referred to as the Pareto principle, and it is common when organizations have to make huge decisions. This is inclined towards the prioritization in that 20% of the factors that contribute to 80% of the organization’s growth will be given top priority. This will give the decisions that have the highest level of impact top priority. Here is an example of a Pareto analysis diagram:
7) Feasibility Study
Feasibility studies are also used in the strategic planning of the business. In this case, entrepreneurs will assess the possibility of creating a specific project and if it can make profits. This is among the tools that should be used at the very beginning of launching a new product or service. This will help the company decide if a particular strategy is ideal or feasible for the company or not.
There are so many other tools that can be used by organizations to facilitate effective decision making. As mentioned earlier, there may be instances where you might have to combine a number of strategies so that you can achieve the best results for your organization. It is important to review every decision that you have taken progressively so as to ensure that the company is achieving the set objectives.